Treasury bonds are issued denominations of $1,000 while municipal bonds are issued in denominations of $5,000. Corporate bonds generally are issued in denominations of $1,000 or sometimes, $5,000. What are the various types of bonds?īonds are categorized by the entities that issue them such as corporate, US Treasury, GSE (Government Sponsored Enterprises) debt securities, and municipal bonds. For example, if you buy a bond with a face value of $1000 and a coupon of 8 percent with a 10-year maturity rate, you'll receive $80 in interest every year, and at the end of the 10 years, you'll get your $1,000 back. Bondholders are entitled to receive the amount of interest originally agreed upon, as well as a return of the principal amount of the bond, provided they hold the bond for the time period specified. They do not share in dividend payments or vote on company matters and the return on their investment does not usually depend on how successful the company is. In return for the use of the money, the company (or municipality or other government entity) also agrees to pay bondholders a certain amount of interest (referred to as a coupon) each year, and is typically a percentage of the amount loaned.īondholders are not owners of the company. Marginal and Effective Tax Rates CalculatorĪ bond is a certificate promising to repay, no later than a specified date, a sum of money that an investor or bondholder has loaned to a company.
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